How Businesses Use Info Systems

8/7/2019 How Businesses Use Info Systems

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How Businesses use Info Systems


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Business Processes and Information

Systems What are Business processes?

Business Processes refer to the manner inwhich work is organized, coordinated andfocused to produce a valuable product orservice.

They are the unique way in which

organizations coordinate work , informationand knowledge and the ways in whichmanagement chooses to coordinate work.


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Every business is a collection of processes.

How well a business firm does depends on

how well its business processes are organizedand coordinated.

While some business processes are tied to a

specific functional area of an organization,

others transcend different functional areas

and require coordination across departments.


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How information technology enhances

business processes?

They enhance business processes in two ways- 1. They increase the efficiency of the existing

processes.

2. They enable entirely new processes that arecapable of transforming the business.


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Types of Business Information Systems

Since a business has many different processes ,different specialists performing different functions anddifferent levels of operation, no single system can

provide all the information an organization requires. The types of information systems in business can be

viewed in two different perspectives:

1. From a functional Perspective: i.e from theperspective of functions these systems aid

2. Constituency perspective: i.e from the perspective ofthe major organizational groups they serve.


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Systems from a functional perspective:

1. Sales and Marketing Systems

2. Manufacturing and Production Systems 3. Finance and accounting systems

4.Human resource systems


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Systems from a Constituency

Perspective

This examines systems in terms of the variouslevels of management and types of decisionsthat they support.

An organization is made up of different levelsof management who have differentinformation need.

Senior management requires summaryinformation that can quickly inform aboutthe overall performance of the organization


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Middle management requires more specificinformation about the performance of thedifferent functional areas

Operational level management requirestransaction level information like the amountof raw material used in production used eachday.

Knowledge workers may require informationfrom some external source.


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Transaction Process Systems

A transaction processing system is a computerisedsystem that performs and records the daily routinetransactions necessary to conduct the business.

This system provides answers to questions related toroutine tasks, and goals which are predefined andhighly structured.

TPS helps managers to monitor the status of internaloperations and also the firms relation with externalenvironment.

TPS are also producers of major information for othertypes of system.


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Management Information Systems and

Decision Support Systems

These are the systems which are used by the

middle management.

MIS provides middle management withreports on organizations current

performance.

This information is used to monitor and

control the business and predict future

performance.


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MIS uses data and information supplied byTPS to summarize and report on the basicoperations of the organization.

The reports prepared by MIS are on a regularschedule daily, weekly, monthly, yearly.

MIS also answers questions that are routine

and have been pre defined. These systems are generally not flexible and

have little analytical capability.


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Decision Support Systems: They are also usedby the middle management, but support thenon routine decision making.

They focus on problems that are unique andare rapidly changing and the solution of theproblem may not be pre defined.

They use information generated by TPS andMIS along with information from externalsources.


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Executive Support Systems

These are the systems which help senior

managers in issues that address strategy, long

term trends both in the firm and the external

environment.

They help the managers take non routine

decisions that require judgment, evaluation

and insight as there is no agreed on solution

for arriving at the solution.


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They use information generated by MIS, DSS

and filter, compress and track critical data and

also present the data of greatest importance

to the senior managers.


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Systems that span the Enterprise

Although useful for the enterprise, maintaining

different functional systems is very costly.

Since an organization is an interdependent

system of different functions, these systems also

need to share information with each other in

order to be useful for the organization.

This problem is overcome with the help of manysystems and one of the most important system is

called Enterprise applications.


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Enterprise applications

In a large organization, there are manydifferent information systems built arounddifferent functional areas of the organization.

In order to get an overall picture of theorganizations operations, data andinformation from these different systems needto be gathered .

This information in different pieces degradesorganizational efficiency and performance.


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This problem is overcome using the Enterprise

system which is also known as Enterprise

Resource Planning ( ERP ).

ERP collects data from the various functional

systems and stores them in a central data

repository.

This stored data then is shared across the

organization.


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Enterprise Systems speed up the communication ofinformation through out the company making it easierfor the businesses to coordinate their operations.

They give flexibility to the company to respond rapidly

to the queries of the customers. This helps the companies to stock only with what is

needed thereby reducing the operational costs.

They provide valuable information for improving

management decision making. They provide company wide information to help

managers analyze the overall product profitability orcost structures.


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Supply Chain Management Systems

These systems help management to manage theirrelationship with their suppliers.

Information regarding order, production, inventory levelsare made available so that suppliers, producers, distributors

can source, produce and distribute goods efficiently. The ultimate objective of these systems is to create

efficiency in the supplies of material so that the rightamount of material is reached from the source to thedestination with the least possible cost and time.

With the help of these systems the businesses are notsaddled with excess inventory thereby reducing theoperational costs.


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Supply chain management systems are one type ofinterorganizational systems because they facilitate the flowof information across organizational boundaries.

Information from supply chain management systems help

firms to : - Decide when and what to produce, store and move.

-Rapidly communicate orders.

- Track the status of orders.

- Check inventory availability and check inventory levels.

- Reduce logistic costs.

-Plan production based on actual customer demand.

- Rapidly communicate changes in product design.


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Customer Relationship Management

Systems

They help firms manage their relationshipwith their customers.

They provide information to coordinate the

activities of all the processes that deal withthe customers in sales marketing and service.

The information provided by this system helps

a firm to identify, attract and retain the mostprofitable customers as also to provide betterservice to the existing customers.


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Knowledge Management Systems

These systems help organizations to bettermanage processes for capturing and applyingknowledge and expertise.

These systems collect all the relevantknowledge and experience in the firm andmake it available whenever and whereverrequired.

They also link the firm to external sources ofknowledge.


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Apart from supporting acquiring, storing,

distributing and applying knowledge, these

systems also help processes to create new

knowledge and integrate it with the ongoing

processes of the organization.


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Intranets and Extranets

Intranets are the internal networks built with

the same tools and communication standards

as the internet and are used for internal

distribution of information to employees.

Extranets are intranets extended to authorised

users outside the company.

Documents

How Businesses Use Info Systems